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expected to be completed in two years with the AANZFTA fully implemented within ten
years. These negotiations build on a long history of involvement between the two groups
of countries dating back to when Australia became the first country to establish formal
links with ASEAN in 1974. In 1993 it was formally proposed that the scope for
cooperation between AFTA and CER be examined, which subsequently occurred along
four tracks, namely Ministerial consultations, trade facilitation, business relationships
(Australia and New Zealand have many business managers working in ASEAN), and
“think-tanking”. In 2002 a broad-gauged Closer Economic Partnership (CEP) between
ASEAN and CER was signed, followed by the FTA negotiations. ASEAN, Australia and New
Zealand as a group started FTA negotiations in 2005 that are
expected to be completed in two years with the AANZFTA fully implemented within ten
years. These negotiations build on a long history of involvement between the two groups
of countries dating back to when Australia became the first country to establish formal
links with ASEAN in 1974. In 1993 it was formally proposed that the scope for
cooperation between AFTA and CER be examined, which subsequently occurred along
four tracks, namely Ministerial consultations, trade facilitation, business relationships
(Australia and New Zealand have many business managers working in ASEAN), and
“think-tanking”. In 2002 a broad-gauged Closer Economic Partnership (CEP) between
ASEAN and CER was signed, followed by the FTA negotiations.
In relation to the individual partners, the CER entered into force on 1 January 1983 and
has evolved to cover substantially all goods and services. In August 1999, the Prime
Ministers of both countries outlined their policy on regional agreements in a joint Prime
Ministerial Statement: “New Zealand and Australia are willing to consider free trade
agreements with significant individual economies or regional groupings, where they
would deliver faster and deeper liberalisation than the multilateral process, with the
objective of gaining better market access for our exporters, faster economic growth and
stronger employment growth. Such arrangements would need to reflect the principles
underpinning the CER, including WTO consistency.” This statement sets out a basis for
the development of the AANZFTA from a CER perspective.
ASEAN initiated AFTA in 1992 with a focus on regional tariff reductions, initially
through to 2008 but revised to a shorter period up to 2003. This agreement was
subsequently broadened to cover non-tariff barriers, harmonisation of standards, etc.
However, there are a number of sensitive sectors including agricultural ones such as rice
that have been excluded from the tariff reductions, etc. Associated agreements have now
also been signed on trade in services and investment. ASEAN as a group has been
looking to enter into trade agreements with other countries such as China as well as the
CER.
Australia, New Zealand and individual ASEAN member countries have a number of
bilateral FTAs between themselves that could have implications for the AANZFTA. For
example, Lloyd (2005) in an analysis of the Australia-Malaysia FTA (AMFTA) which is
currently under negotiation suggests in relation to investment negotiations that those for
AANZFTA should follow relevant bilateral approaches such as on investor protection,
dispute settlement mechanisms, and national treatment to deepen the agreement, as well
as attempt to outlaw investment incentives. It is envisaged that AANZFTA will cover in a
consistent and compatible way, bi-lateral trade between Australia and New Zealand on
the one hand and each individual ASEAN member on the other, but not the bilateral trade
between Australia and New Zealand themselves, or the trade among the ASEAN
members themselves. In respect of Australia, the Singapore-Australia Free Trade
Agreement (SAFTA) entered into force in July 2003 and the Thailand-Australia Free
Trade Agreement (TAFTA) was signed in July 2004.
New Zealand has a FTA with Singapore, the New Zealand Singapore CEP (NZSCEP),
which was completed before the SAFTA. Negotiations on a CEP Agreement between
New Zealand and Thailand were concluded in November 2004 and entered into force
from 1 July 2005. In parallel with this CEP, arrangements on labour, environment and
customs cooperation were negotiated. Arrangements on these first two aspects have not
been part of Australian negotiations which reflects differences in the socio-economic
environment and the political economy of the two countries. Negotiations for a Trans-
Pacific Strategic Economic partnership Agreement (TPSEP) involving Brunei
Darussalam, Chile, New Zealand and Singapore were recently concluded. The TPSEP
(together with the parallel agreement on labour and environment) was expected to enter
into force early in 2006. New Zealand and Malaysia have also started formal rounds oIn relation
to the individual partners, the CER entered into force on 1 January 1983 and
has evolved to cover substantially all goods and services. In August 1999, the Prime
Ministers of both countries outlined their policy on regional agreements in a joint Prime
Ministerial Statement: “New Zealand and Australia are willing to consider free trade
agreements with significant individual economies or regional groupings, where they
would deliver faster and deeper liberalisation than the multilateral process, with the
objective of gaining better market access for our exporters, faster economic growth and
stronger employment growth. Such arrangements would need to reflect the principles
underpinning the CER, including WTO consistency.” This statement sets out a basis for
the development of the AANZFTA from a CER perspective.
ASEAN initiated AFTA in 1992 with a focus on regional tariff reductions, initially
through to 2008 but revised to a shorter period up to 2003. This agreement was
subsequently broadened to cover non-tariff barriers, harmonisation of standards, etc.
However, there are a number of sensitive sectors including agricultural ones such as rice
that have been excluded from the tariff reductions, etc. Associated agreements have now
also been signed on trade in services and investment. ASEAN as a group has been
looking to enter into trade agreements with other countries such as China as well as the
CER.
Australia, New Zealand and individual ASEAN member countries have a number of
bilateral FTAs between themselves that could have implications for the AANZFTA. For
example, Lloyd (2005) in an analysis of the Australia-Malaysia FTA (AMFTA) which is
currently under negotiation suggests in relation to investment negotiations that those for
AANZFTA should follow relevant bilateral approaches such as on investor protection,
dispute settlement mechanisms, and national treatment to deepen the agreement, as well
as attempt to outlaw investment incentives. It is envisaged that AANZFTA will cover in a
consistent and compatible way, bi-lateral trade between Australia and New Zealand on
the one hand and each individual ASEAN member on the other, but not the bilateral trade
between Australia and New Zealand themselves, or the trade among the ASEAN
members themselves. In respect of Australia, the Singapore-Australia Free Trade
Agreement (SAFTA) entered into force in July 2003 and the Thailand-Australia Free
Trade Agreement (TAFTA) was signed in July 2004.
New Zealand has a FTA with Singapore, the New Zealand Singapore CEP (NZSCEP),
which was completed before the SAFTA. Negotiations on a CEP Agreement between
New Zealand and Thailand were concluded in November 2004 and entered into force
from 1 July 2005. In parallel with this CEP, arrangements on labour, environment and
customs cooperation were negotiated. Arrangements on these first two aspects have not
been part of Australian negotiations which reflects differences in the socio-economic
environment and the political economy of the two countries. Negotiations for a Trans-
Pacific Strategic Economic partnership Agreement (TPSEP) involving Brunei
Darussalam, Chile, New Zealand and Singapore were recently concluded. The TPSEP
(together with the parallel agreement on labour and environment) was expected to enter
into force early in 2006. New Zealand and Malaysia have also started formal rounds of
negotiations. Australia and New Zealand have followed each other’s FTAs apart from a
few exceptions, the most notable being the United States which has a FTA and defence
agreements with Australia but not New Zealand.
The Guiding Principles for Negotiation on AANZFTA are based on an objective of the
FTA being mutually beneficial for all parties, and with this objective in mind, the
negotiations will be guided by the following principles:
(a) The FTA should be comprehensive in scope, covering trade in goods, services and
investment.
(b) The objective of the FTA should be to move towards deeper economic integration
between the two regions through progressive elimination of all forms of barriers
to trade in goods, services and investment; and through trade and investment
facilitation and economic cooperation measures.
(c) The FTA should, where relevant, build on members’ commitment in the WTO.
(d) Due consideration should be given to the different levels of development and
capacity of the Member Countries to participate in comprehensive trade and
investment liberalization. The FTA should therefore include provisions for
flexibility, including special and differential treatment, especially for the newer
ASEAN members.
(e) Recognising the different levels of development among the Member Countries of
the two regions, provision should be made for technical assistance and capacity
building programs to enable all parties to participate fully and to obtain full
benefit from the FTA.
(f) The FTA will be designed to enhance and improve transparency in trade and
investment relations between the parties.
(g) The modalities and time frames of the FTA, including differentiated timeframes
for Australia and New Zealand, ASEAN-6 and CLMV (Cambodia, Laos,
Myanmar and Vietnam), and products, should be settled at an early stage of the
negotiations.
(h) The FTA will be open to inclusion of issues not covered by the existing AFTA
and CER Agreements, to be agreed by all parties.
(i) The terms of the FTA will be subject to periodic review.
(j) The FTA should be consistent with WTO provisions, including GATT Article
XXIV and GATS Article V.
(k) The FTA should draw, as appropriate, on elements of economic integration
agreements of ASEAN and CER. In addition, the elements of any FTA involving
ASEAN Member Countries, Australia and New Zealand may be used as reference
points.
(l) AFTA and CER will continue to exist as distinct, functioning agreements, as will
the FTAs between ASEAN Member Countries, Australia and New Zealand. No
provision in the FTA will detract from the terms and conditions of bilateral and
plurilateral FTAs between ASEAN Member Countries, Australia and New
Zealand.
These Guiding Principles have had different interpretations in the negotiations, including
in respect of covering “substantially all trade”. Agriculture would be expected to be
considered in the AANZFTA as it has in the above related comprehensive FTAs between
individual ASEAN and CER countries, though often with some flexibility. Agricultural
products have no special provisions in the CER, SAFTA and the NZSCEP, but make up
the majority of “sensitive list” products in ASEAN (Scollay 2003).
Agricultural trade liberalisation means in WTO terms, market access, export subsidies,
and domestic support. In a FTA context, market access is covered but generally not
export subsidies which is a multilateral issue (though the NZTCEP does prohibit export
subsidies in agriculture), and generally never domestic support as this would not benefit
parties inside the FTA any more than those outside the FTA. Satisfactory agricultural
trade liberalisation through FTAs is dependent on a satisfactory WTO outcome in this
regard.
Anegotiations. Australia and New Zealand have followed each other’s FTAs apart from a
few exceptions, the most notable being the United States which has a FTA and defence
agreements with Australia but not New Zealand.
The Guiding Principles for Negotiation on AANZFTA are based on an objective of the
FTA being mutually beneficial for all parties, and with this objective in mind, the
negotiations will be guided by the following principles:
(a) The FTA should be comprehensive in scope, covering trade in goods, services and
investment.
(b) The objective of the FTA should be to move towards deeper economic integration
between the two regions through progressive elimination of all forms of barriers
to trade in goods, services and investment; and through trade and investment
facilitation and economic cooperation measures.
(c) The FTA should, where relevant, build on members’ commitment in the WTO.
(d) Due consideration should be given to the different levels of development and
capacity of the Member Countries to participate in comprehensive trade and
investment liberalization. The FTA should therefore include provisions for
flexibility, including special and differential treatment, especially for the newer
ASEAN members.
(e) Recognising the different levels of development among the Member Countries of
the two regions, provision should be made for technical assistance and capacity
building programs to enable all parties to participate fully and to obtain full
benefit from the FTA.
(f) The FTA will be designed to enhance and improve transparency in trade and
investment relations between the parties.
(g) The modalities and time frames of the FTA, including differentiated timeframes
for Australia and New Zealand, ASEAN-6 and CLMV (Cambodia, Laos,
Myanmar and Vietnam), and products, should be settled at an early stage of the
negotiations.
(h) The FTA will be open to inclusion of issues not covered by the existing AFTA
and CER Agreements, to be agreed by all parties.
(i) The terms of the FTA will be subject to periodic review.
(j) The FTA should be consistent with WTO provisions, including GATT Article
XXIV and GATS Article V.
(k) The FTA should draw, as appropriate, on elements of economic integration
agreements of ASEAN and CER. In addition, the elements of any FTA involving
ASEAN Member Countries, Australia and New Zealand may be used as reference
points.
(l) AFTA and CER will continue to exist as distinct, functioning agreements, as will
the FTAs between ASEAN Member Countries, Australia and New Zealand. No
provision in the FTA will detract from the terms and conditions of bilateral and
plurilateral FTAs between ASEAN Member Countries, Australia and New
Zealand.
These Guiding Principles have had different interpretations in the negotiations, including
in respect of covering “substantially all trade”. Agriculture would be expected to be
considered in the AANZFTA as it has in the above related comprehensive FTAs between
individual ASEAN and CER countries, though often with some flexibility. Agricultural
products have no special provisions in the CER, SAFTA and the NZSCEP, but make up
the majority of “sensitive list” products in ASEAN (Scollay 2003).
Agricultural trade liberalisation means in WTO terms, market access, export subsidies,
and domestic support. In a FTA context, market access is covered but generally not
export subsidies which is a multilateral issue (though the NZTCEP does prohibit export
subsidies in agriculture), and generally never domestic support as this would not benefit
parties inside the FTA any more than those outside the FTA. Satisfactory agricultural
trade liberalisation through FTAs is dependent on a satisfactory WTO outcome in this
regard.
Anegotiations. Australia and New Zealand have followed each other’s FTAs apart from a
few exceptions, the most notable being the United States which has a FTA and defence
agreements with Australia but not New Zealand.
The Guiding Principles for Negotiation on AANZFTA are based on an objective of the
FTA being mutually beneficial for all parties, and with this objective in mind, the
negotiations will be guided by the following principles:
(a) The FTA should be comprehensive in scope, covering trade in goods, services and
investment.
(b) The objective of the FTA should be to move towards deeper economic integration
between the two regions through progressive elimination of all forms of barriers
to trade in goods, services and investment; and through trade and investment
facilitation and economic cooperation measures.
(c) The FTA should, where relevant, build on members’ commitment in the WTO.
(d) Due consideration should be given to the different levels of development and
capacity of the Member Countries to participate in comprehensive trade and
investment liberalization. The FTA should therefore include provisions for
flexibility, including special and differential treatment, especially for the newer
ASEAN members.
(e) Recognising the different levels of development among the Member Countries of
the two regions, provision should be made for technical assistance and capacity
building programs to enable all parties to participate fully and to obtain full
benefit from the FTA.
(f) The FTA will be designed to enhance and improve transparency in trade and
investment relations between the parties.
(g) The modalities and time frames of the FTA, including differentiated timeframes
for Australia and New Zealand, ASEAN-6 and CLMV (Cambodia, Laos,
Myanmar and Vietnam), and products, should be settled at an early stage of the
negotiations.
(h) The FTA will be open to inclusion of issues not covered by the existing AFTA
and CER Agreements, to be agreed by all parties.
(i) The terms of the FTA will be subject to periodic review.
(j) The FTA should be consistent with WTO provisions, including GATT Article
XXIV and GATS Article V.
(k) The FTA should draw, as appropriate, on elements of economic integration
agreements of ASEAN and CER. In addition, the elements of any FTA involving
ASEAN Member Countries, Australia and New Zealand may be used as reference
points.
(l) AFTA and CER will continue to exist as distinct, functioning agreements, as will
the FTAs between ASEAN Member Countries, Australia and New Zealand. No
provision in the FTA will detract from the terms and conditions of bilateral and
plurilateral FTAs between ASEAN Member Countries, Australia and New
Zealand.
These Guiding Principles have had different interpretations in the negotiations, including
in respect of covering “substantially all trade”. Agriculture would be expected to be
considered in the AANZFTA as it has in the above related comprehensive FTAs between
individual ASEAN and CER countries, though often with some flexibility. Agricultural
products have no special provisions in the CER, SAFTA and the NZSCEP, but make up
the majority of “sensitive list” products in ASEAN (Scollay 2003).
Agricultural trade liberalisation means in WTO terms, market access, export subsidies,
and domestic support. In a FTA context, market access is covered but generally not
export subsidies which is a multilateral issue (though the NZTCEP does prohibit export
subsidies in agriculture), and generally never domestic support as this would not benefit
parties inside the FTA any more than those outside the FTA. Satisfactory agricultural
trade liberalisation through FTAs is dependent on a satisfactory WTO outcome in this
regard.